Senate Democrats are reportedly working to cut back their proposed tax hikes as they look to reach a deal on a slimmed-down economic package with Sen. Joe Manchin (D-WV), the holdout who controls the fate of the bill.
Bloomberg News reports that Democrats are considering a range of changes to their tax plans that would make the package “more business friendly” and also lessen the hit to wealthy households. But negotiators still face a slew of contentious decisions as they close in on a bill with a topline of roughly $1 trillion, significantly less than the $2.2 trillion in new spending contained in version of the budget reconciliation bill passed by the House late last year. Bloomberg reports that the new outline, yet to be finalized, calls for about $500 billion in new spending and $500 billion in deficit reduction over 10 years.
Among the thorny — and politically perilous — choices Democrats have to make is whether to extend enhanced Affordable Care Act subsidies provided as part of the 2021 American Rescue Plan Act. Those increased subsidies are set to expire, potentially leaving millions of Obamacare enrollees facing higher premiums for 2023. “Including the roughly $200 billion ACA premiums in a $500 billion spending package would entail scaling back the $550 billion climate provisions from the House bill,” Bloomberg reports.
The bottom line: Democrats have long been aware that any deal they reach will jettison many elements of the package they hoped to pass last year as they try to appease Manchin, but the details here will matter both in terms of policy and politics. Any deal will have to come together within weeks.